Tax-break Extension Asked For Apartments

July 08, 1994|By LEE FOSTER; Courant Staff Writer

MANCHESTER — The owner of the Velvet Mills and Clock Tower Mills apartments has asked the town for a break on property taxes for the two properties.

The Konover Corp., which is based in West Hartford, has requested a two-year extension of the phase-in schedule for tax increases that resulted from improvements to the properties. The extension would extend the phase-in from nine years to 11 years.

If the board of directors approves the request, the extension could save Konover about $127,000, General Manager Richard Sartor told the board Tuesday.

In 1984, when Konover bought and renovated the buildings, the town had agreed to phase in the tax increases a little each year for eight years -- by the ninth year the full effect would be reflected in the tax bills, Sartor said. Taxes went up on the properties in 1984, when the town reassessed their value after improvements were made.

There were no public comments on the request at a hearing at Tuesday's board of directors meeting. The directors may consider the request at an August meeting.

Konover's purchase was made during the real estate boom of the 1980s, when it was assumed that property values would continue to rise. Although state law allows phase-in periods of as long as 11 years, the shorter term was considered sufficient at the time because developers were confident their properties would always earn a profit, Sartor told the directors.

But, the boom ended and property values plummeted. The market values of the two apartment complexes are lower than the amount Konover owes on them and the developer is behind on mortgage payments and in default on both mortgages, Sartor said.

Konover, however, should be encouraged to hold on to the buildings, Assistant Town Manager Steve Werbner said Thursday. The former mill buildings were a blight on that part of town and Konover's work rejuvenated the area, he said.

``Konover has proven to be a solid landlord. They have maintained the property in good condition. The town had invested substantially in that area and there should be an effort to keep the property in acceptable condition,'' Werbner said.

The Clock Tower Mill Apartments are assessed at $5,206,940 and Velvet Mills Apartments at $4,338,270.

In case of foreclosure, the new agreement would be invalid and the original agreement for a nine-year phase-in would be reactivated, Sartor said. If foreclosure took place after the nine years had passed, however, the full amount of the tax increase would become due upon a change of ownership.